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Zions Q2 Earnings Beat as Revenues Rise, Stock Dips on Cost Woes
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Key Takeaways
Zions beat Q2 earnings estimates; adjusted EPS rose 10.1% y/y.
ZION's NII grew y/y, supported by lower funding costs and higher-yielding loans.
ZION's adjusted expenses rose 4.8%, while shares fell 2.8% after hours despite the earnings beat.
Zions Bancorporation’s (ZION - Free Report) second-quarter 2026 adjusted earnings of $1.74 per share surpassed the Zacks Consensus Estimate of $1.57. Moreover, the bottom line increased 10.1% from the year-ago quarter.
Results were primarily aided by higher net interest income (NII) and growth in non-interest income. Higher sequential loan balance was another positive. However, a rise in non-interest expenses hurt the results to some extent. In the reported quarter, the company recorded a provision expense as against a benefit in the year-ago quarter. Probably because of these negatives, shares of the company lost 2.8% in the after-market hours despite better-than-expected overall performance.
The reported quarter’s results excluded net equity investment gains of $215 million on Visa Class B-1 shares and $37 million on SBIC investments. After considering these, net income attributable to common shareholders (GAAP) was $452 million, up 86% year over year. We had projected the metric to be $396 million.
Zions’ Revenues Improve, Expenses Rise
Net revenues (taxable-equivalent) were $1.15 billion, up 35% year over year. Adjusted tax-equivalent net revenues were $878 million. The Zacks Consensus Estimate for second-quarter revenues was $879.2 million.
NII was $677 million, up 4.5% from the prior-year quarter. The increase was mainly driven by lower funding costs and an improved mix of average interest-earning assets, reflecting growth in higher-yielding loans and a decline in lower-yielding investment securities. The net interest margin (NIM) expanded 10 basis points (bps) year over year to 3.27%. Our estimates for NII and NIM were $671 million and 3.29%, respectively.
Non-interest income was $460 million, up significantly from $190 million in the year-ago quarter. The rise was driven by an increase in almost all fee income components, except for dividends and other income. In the reported quarter, the company recorded net securities gains of $269 million, up significantly from $14 million in the prior-year quarter. Adjusted non-interest income was $190 million in the reported quarter. We had projected non-interest income of $186.7 million.
Adjusted non-interest expenses were $546 million, up 4.8% year over year. Our estimate for the metric was $551 million.
The adjusted efficiency ratio was 62.2%, unchanged from the prior-year quarter.
As of June 30, 2026, net loans and leases held for investment were $61.8 billion, up 1.9% from the previous quarter. Total deposits were $76.6 billion, down marginally from the prior quarter. Our estimates for net loans and leases held for investment and total deposits were $62.1 billion and $76.3 billion, respectively.
ZION’s Credit Quality: A Mixed Bag
The ratio of non-performing assets to loans and leases and other real estate owned declined to 0.48% from 0.51% in the year-ago quarter. Net loan and lease charge-offs were $9 million, down from $10 million in the prior-year quarter.
However, in the reported quarter, the company recorded a provision for credit losses of $3 million against a $1-million provision benefit in the prior-year quarter. We had projected provisions of $16 million.
Strong Capital & Profitability Ratios for Zions
As of June 30, 2026, the common equity tier 1 (CET1) capital ratio was 11.8%, up from 11% in the prior-year quarter. The Tier 1 risk-based capital ratio was 11.9% compared with 11.1% a year ago, while the Tier 1 leverage ratio improved to 9.4% from 8.5% at the end of the year-ago quarter.
Return on average assets was 2.01%, up from 1.09% in the year-ago quarter. Return on average tangible common equity was 28.6%, up from 18.7% in the prior-year quarter.
ZION’s Share Repurchase Update
During the quarter, the company repurchased 1.2 million shares for $75 million.
Our Take on ZION
Zions’ modest loan growth, improving NII, solid fee income growth and strengthening deposit base are encouraging. However, elevated expenses and significant exposure to commercial loans remain key concerns.
Zions Bancorporation, N.A. Price, Consensus and EPS Surprise
Commerce Bancshares Inc.’s (CBSH - Free Report) second-quarter 2026 earnings of $1.10 per share surpassed the Zacks Consensus Estimate of $1.04. The bottom line reflected a rise of 1% from the prior-year quarter.
CBSH’s results primarily benefited from higher NII and a rise in non-interest income. The sequential rise in loan balances acted as a tailwind. However, higher expenses and provisions hurt CBSH’s results to some extent.
F.N.B. Corporation (FNB - Free Report) reported second-quarter 2026 earnings of 42 cents per share, which matched the Zacks Consensus Estimate. The bottom line jumped 16.7% year over year.
FNB’s results primarily benefited from higher NII, a rise in non-interest income and lower provisions. Higher average loans and deposits were other positives. However, higher non-interest expenses hurt the results to some extent.
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Zions Q2 Earnings Beat as Revenues Rise, Stock Dips on Cost Woes
Key Takeaways
Zions Bancorporation’s (ZION - Free Report) second-quarter 2026 adjusted earnings of $1.74 per share surpassed the Zacks Consensus Estimate of $1.57. Moreover, the bottom line increased 10.1% from the year-ago quarter.
Results were primarily aided by higher net interest income (NII) and growth in non-interest income. Higher sequential loan balance was another positive. However, a rise in non-interest expenses hurt the results to some extent. In the reported quarter, the company recorded a provision expense as against a benefit in the year-ago quarter. Probably because of these negatives, shares of the company lost 2.8% in the after-market hours despite better-than-expected overall performance.
The reported quarter’s results excluded net equity investment gains of $215 million on Visa Class B-1 shares and $37 million on SBIC investments. After considering these, net income attributable to common shareholders (GAAP) was $452 million, up 86% year over year. We had projected the metric to be $396 million.
Zions’ Revenues Improve, Expenses Rise
Net revenues (taxable-equivalent) were $1.15 billion, up 35% year over year. Adjusted tax-equivalent net revenues were $878 million. The Zacks Consensus Estimate for second-quarter revenues was $879.2 million.
NII was $677 million, up 4.5% from the prior-year quarter. The increase was mainly driven by lower funding costs and an improved mix of average interest-earning assets, reflecting growth in higher-yielding loans and a decline in lower-yielding investment securities. The net interest margin (NIM) expanded 10 basis points (bps) year over year to 3.27%. Our estimates for NII and NIM were $671 million and 3.29%, respectively.
Non-interest income was $460 million, up significantly from $190 million in the year-ago quarter. The rise was driven by an increase in almost all fee income components, except for dividends and other income. In the reported quarter, the company recorded net securities gains of $269 million, up significantly from $14 million in the prior-year quarter. Adjusted non-interest income was $190 million in the reported quarter. We had projected non-interest income of $186.7 million.
Adjusted non-interest expenses were $546 million, up 4.8% year over year. Our estimate for the metric was $551 million.
The adjusted efficiency ratio was 62.2%, unchanged from the prior-year quarter.
Zion’s Loans Increase, Deposits Decline Marginally
As of June 30, 2026, net loans and leases held for investment were $61.8 billion, up 1.9% from the previous quarter. Total deposits were $76.6 billion, down marginally from the prior quarter. Our estimates for net loans and leases held for investment and total deposits were $62.1 billion and $76.3 billion, respectively.
ZION’s Credit Quality: A Mixed Bag
The ratio of non-performing assets to loans and leases and other real estate owned declined to 0.48% from 0.51% in the year-ago quarter. Net loan and lease charge-offs were $9 million, down from $10 million in the prior-year quarter.
However, in the reported quarter, the company recorded a provision for credit losses of $3 million against a $1-million provision benefit in the prior-year quarter. We had projected provisions of $16 million.
Strong Capital & Profitability Ratios for Zions
As of June 30, 2026, the common equity tier 1 (CET1) capital ratio was 11.8%, up from 11% in the prior-year quarter. The Tier 1 risk-based capital ratio was 11.9% compared with 11.1% a year ago, while the Tier 1 leverage ratio improved to 9.4% from 8.5% at the end of the year-ago quarter.
Return on average assets was 2.01%, up from 1.09% in the year-ago quarter. Return on average tangible common equity was 28.6%, up from 18.7% in the prior-year quarter.
ZION’s Share Repurchase Update
During the quarter, the company repurchased 1.2 million shares for $75 million.
Our Take on ZION
Zions’ modest loan growth, improving NII, solid fee income growth and strengthening deposit base are encouraging. However, elevated expenses and significant exposure to commercial loans remain key concerns.
Zions Bancorporation, N.A. Price, Consensus and EPS Surprise
Zions Bancorporation, N.A. price-consensus-eps-surprise-chart | Zions Bancorporation, N.A. Quote
Currently, Zions carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Commerce Bancshares Inc.’s (CBSH - Free Report) second-quarter 2026 earnings of $1.10 per share surpassed the Zacks Consensus Estimate of $1.04. The bottom line reflected a rise of 1% from the prior-year quarter.
CBSH’s results primarily benefited from higher NII and a rise in non-interest income. The sequential rise in loan balances acted as a tailwind. However, higher expenses and provisions hurt CBSH’s results to some extent.
F.N.B. Corporation (FNB - Free Report) reported second-quarter 2026 earnings of 42 cents per share, which matched the Zacks Consensus Estimate. The bottom line jumped 16.7% year over year.
FNB’s results primarily benefited from higher NII, a rise in non-interest income and lower provisions. Higher average loans and deposits were other positives. However, higher non-interest expenses hurt the results to some extent.